Difficult Road to Recovery For Airlines as Losses Expected to Continue Into 2021
International air travel fell dramatically in 2020. According to the UN’s air transportation agency international air travel declined by around 60% in 2020 to levels last seen in 2003. This decline led to a loss of approximately $370 billion for the airline industry in 2020. Losses are expected to continue into 2021 with a net loss of $38.7 billion expected according to the International Air Transport Association. As a result, many airlines may continue to depend on financial support from governments to survive.
Improvements in airline financial performance are expected to come in the second half of 2021. Demand for air travel is expected to increase in the second half of 2021 provided that international borders can safely reopen as a result of the introduction of widespread testing and/or vaccine rollout. In an optimistic scenario, the International Civil Aviation Organization ICAO predicts global passenger numbers will recover to 71% of their 2019 levels by June 2021. The anticipated increase in demand combined with aggressive cost cutting measures could see the airline industry turn cash positive in the fourth quarter of 2021 however passenger numbers are not expected to return to 2019 levels until 2024.
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